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Governments Are Going Broke Worldwide

When I talk to self-identified “conservatives” today, I am surprised how many of them have finally awakened to the fact that governments all over the Western world are bankrupt. It has taken a long time for them to do the math, but it is finally dawning on them that when a government’s debts and liabilities massively outweigh its current and future assets and “income” (a more accurate word would be “loot”), that country is headed for disaster. While they cannot be praised for their quickness in recognizing something so blatantly obvious, at least these “conservatives” have bested their “liberal” friends in solving the problem, since most of the latter are sadly unable to add and subtract numbers with 12 zeros.

While I am pleasantly surprised that many so-called “conservatives” can now spot an obvious bankruptcy when they see it, I am less than impressed with their understanding of what bankruptcy entails for a government. Almost invariably, they naively assume that government bankruptcy is analogous to the bankruptcy of a private company. Just as a bankrupted company like Enron shrivels up and disappears from the economic stage, they assume, bankrupted governments will shrivel up and, if not disappear from the world stage, at least take on severely limited roles. The bankruptcy of governments is thus assumed to be a positive development for individual liberty, according to many so-called “conservatives,” because governments will be forced to live within their means and abandon most of their unsustainable and meddling schemes. A golden age of liberty and respect for the Constitution is assumed to be right around the corner.

This idea that government bankruptcy is a positive development for individual liberty is just plain wrong, however. More than that, it is just plain delusional. Governments are not in any way analogous to private companies, and it cannot be sanely assumed that they will shrivel up or disappear like private companies just because they are bankrupt. Governments obtain their wealth by “taxing” people, and bankruptcy in no way impedes their ability to seize wealth (unless they, like the Romans, stupidly neglect to pay police and military salaries). On the contrary, their desperate need for money during bankruptcy should be expected to induce them to try to suck even more money out of their subjects than they did before.